Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.

Friday, April 24, 2015

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’

BUZZ, BUZZ – the BUZZ
is back!

Sorry I have been
late in returning to regular posting.I
have been working away on the GD extensions – and have made some good
progress.I want to have all of the
returns for which I have information done by the end of April.

Here are some items
of interest that appeared during my tax season hiatus, and some more recent
BUZZ-worth stuff.

* Barbara Weltman reminded
me of some history that I had forgotten on one of “The President’s Tax Proposals” at BARBARA’S BLOG (highlight is mine) -

“The concept of carryover basis for inherited
property was created by the Tax Reform Act of 1976 and was set to take effect
for property inherited from decedents dying in 1977 and later. Heirs and tax practitioners soon realized
that it was unworkable - it was impossible in many/most cases to know what a
decedent had paid for property or whether that property had originally been
acquired by gift or inheritance, and whether any improvements that would
increase basis had been made. A moratorium was in place until 1978; it was
repealed in 1979.”

“ . . . the Internal Revenue Code ought not be used
to accomplish goals that ought to be spelled out in other legislation.”

Speaking of the
1095-A FU Jim correctly states -

“If it is outrageous that the IRS has caused
problems for almost a million taxpayers, is it not even more outrageous that
the IRS was put in this position because the Congress was unwilling to charge
HHS with the responsibility for administering the Affordable Care Act?”

While not the
intention of the post, it gives a good reason why relying on a box (tax
preparation software) to prepare your return is a bad idea.

“According to a report on a recent NerdWallet
survey, ‘[m]ost American adults get an ‘F’ in understanding income tax basics’.
The survey posed 10 questions to 1,015 people. The average score was 51 percent.”

Professor Maule has
an excellent suggestion -

“It would be fun to require members of
Congress and candidates for that office to take this survey, or one like it. I
cannot imagine the outcome would be any better than that achieved by the 1,015
survey takers.”

“The House Ways and Means Committee released
a new report Wednesday on the Internal Revenue Service’s declining level of
customer service during the 2015 tax-filing season, blaming the IRS for
diverting funds away from taxpayer service to finance other priorities such as
implementation of the Affordable Care Act.”

The report found
that -

“ . . . the IRS made a 73 percent reduction
in user fees allocated to customer service, and a 6 percent decrease in total
funding for taxpayer assistance. On the other hand, the IRS awarded $60 million
in bonuses to its employees, at a time when the IRS did not yet know what its
budget would be for fiscal year 2015. The amount of time IRS employees spent on
union activity would allow for over 2 million additional taxpayer-assistance
calls, according to the report.”

Jason agrees that
the new Obamacare tax return requirements were not such a big deal after all –

“The ACA wasn’t really that big of a deal. I
keep reading all these horror stories online about accountants saying this was
the “worst season ever” because of the ACA. Yes, it meant asking more questions
and possibly filling out more forms, but I don’t get what was so horrific about
it from a tax-preparation standpoint.”

While Commissioner
Koskinen did “thank all the tax
professionals and other partners who have helped to make a challenging filing
season run as smoothly as we could have hoped”, he specifically identified –

“The work of attorneys, Certified Public
Accountants and Enrolled Agents as well as the software industry and payroll
community has been extremely helpful—and essential—to running the tax system
and helping the nation.”

Obviously Enrolled
Agents need to be thanked.But
attorneys?I can’t imagine anyone using
an attorney to prepare a 1040, unless it was extremely complicated and involved
unique legal issues.The cost would be
prohibitive.And why single out CPAs but
forget the tens of thousands of competent and qualified “unenrolled” preparers.These preparers are more essential and
helpful to running the tax system than the CPA industry.Further erroneous perpetuation of the urban
tax myth that CPAs are automatically 1040 experts.

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